Another $16 million in ‘frozen’ school taxes

So we have a provincial government that’s really leaning on school boards to freeze education property taxes, and that same provincial government increases the amount of money raised through education property taxes by $16 million.

And also informed the public by Education Minister Nancy Allan’s mentioning it on page 12 of her budget speech to the legislature.

I’ll take the government’s word for that — I’ve been Googling Hansard and have yet to find the specific reference. Obviously, it’s my fault for missing this story earlier by not having read the minister’s speech.

Certainly, I was there the day in January when Allan announced this year’s operating grants, and I listened intently then and asked a lot of questions, and can recall nary a syllable about an additional $16 million.

Hang on, this is one of those issues that can have your eyes glaze over, and I’m not sure I can explain this concisely enough so that even Hugh’s bloodhounds and the ever-vigilant Manitoba branch of the Canadian Taxpayers’ Federation will make it through to the end.......

You’ll recall that there was a province-wide reassessment this year, which resulted in a significant drop in mill rates. Remember, you divide the assessment base into the amount of money you want to raise through taxation, that gives you the mill rate, so if you divide a larger number (increased property values) into a stable number (property taxes raised) the mill rate goes down.

One of the many complicated aspects of reassessment was that some of the share of property taxes, even in a freeze, shifted from business to homeowners. That’s because residential property values rose much more sharply than did business property values. That link above explains (tries to explain) it.

Which brings us to the education support levy (ESL). That’s collected on the property tax bill, but it a provincial tax collected by the province at a uniform mill rate. The NDP phased it out on houses a few years ago, but it still applies to commercial properties.

The Selinger government reckoned that with the disparate average increase in property values, that about $16 million of the education property taxes would shift from business property owners to residential property owners. That’s even in a freeze situation, and we told you about that a few months ago.

OK, so let’s sum up so far, for those of you still with us......homeowners pay $16 million more, business owners pay $16 million less, it all balances out in school divisions with a freeze.

But wait, there’s more.......

The province figured that that shift disrupted the previous balance between business and homeowner shares of the property tax burden. I don’t recall there having been a presumption of balance, but there again that’s probably just my missing a huge chunk of the big picture again.

So when the province set the uniform mill rate for the ESL on business to adjust for reassessment, it pegged the rate so that it would produce an additional $16 million in taxes, the vast majority of it from Winnipeg businesses, whose property values went up considerably more than the values of rural businesses.

So the business owners would supposedly end up with the same overall property tax bill as the year before, but there’d be an additional $16 million going into the provincial kitty when the smoke cleared. Keep in mind, the ESL goes to the province, not to the school division, even though it’s collected on the municipal property tax bill.

And this is all supposedly up-front and transparent, and next year I promise to read page 12 of the minister’s budget speech in Hansard, and probably all the other pages too.

This $16 million story came to light because the owner of an auto body shop called me to complain about his property tax bill, and mistakenly thought that Seven Oaks School Division was at fault. He and I went through his tax bill line by line, and I couldn’t see any reason that his ESL had shot up enormously.

Until I made some calls. Seven Oaks and the city assessor were extremely helpful in my understanding what was happening before I called the province.

Sigh.

So that extra $16 million, the province says it pumped the money back into public education.

Where?

Don’t know yet, but I’m betting some of that went into the tax incentive grant (TIG).

Remember TIG, which is the provincial incentive to school boards to freeze taxes, and to only increase school spending by the TIG and the local increase in provincial operating grants? You do? Then surely you also remember the extra $9 million TIG payment that Allan wasn’t allowed to tell anyone about because the money was doled out during the Concordia byelection.

I’d been watching the school trustees accept TIG, and thought the money was adding up to more than Allan put in the pot back in January.

Here’s the link to the story I wrote when Allan finally told us about the extra $9 million.

So going back to the story I wrote in the paper a few days ago — the first link way back near the top of this blog — and again I ask not necessarily rhetorically, was it an unexpected provincial tax windfall of $16 million or a provincial cash grab from business owners hidden in the confusion of reassessment, or something else altogether?

I can hear a survivor or two who got this far muttering that you wish this was one of those blogs in which I talk about my kids or rant about what’s happened at the soccer matches I refereed in the last couple of weeks.

Isn’t public education funding simple and straightforward? Is this the way we should be funding our public education system?

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